Ever since the Guardian exposed allegations of a BAE slush fund in 2004 the politically influential arms company has been under investigation from a variety of directions. But its troubles in Britain are probably now over, leaving the Serious Fraud Office, which tried to pursue it, weakened, demoralised and humiliated.

One senior legal figure said yesterday: "A long-term result of the Guardian's exposures may ironically probably turn out to be the destruction of the SFO itself."

Its director, Robert Wardle, has stepped down. The assistant director in charge of the BAE investigation, Helen Garlick, has decided to resign. Both have been snapped up as consultants by private law firms.

The new SFO director, Richard Alderman, is reported to have so far failed to provide any extra funding for the backlog of unresolved corruption cases steadily building up. His first act was to drop a proposal to bring corruption charges in a separate case involving a Bosnian energy entrepreneur.

Since the Labour government passed a limited anti-corruption act in 2002, claiming to be conforming to an international anti-bribery convention, the SFO has not been allowed to bring a single bribery prosecution, let alone obtain any convictions.

Meanwhile, the US has been vigorously prosecuting companies under its Foreign Corrupt Practices Act, and both France and Germany have brought politically embarrassing cases against their household name firms of Total-Elf and Siemens.

The two BAE senior executives at the centre of the corruption allegations were Sir Dick Evans and Mike Turner, both of whom were interviewed by the SFO and named as possible suspects. But both have moved on, leaving little of the old regime at BAE. Its current chairman, Dick Olver, has pursued a determined public relations strategy, designed to convey the impression that BAE has mended its ways.

This involved hiring the retired lord chief justice, Harry Woolf, at £6,000 a day, to lend his name to a report which said BAE had "not paid sufficient attention to ethics" in the past. This was greeted with scepticism by critics, but BAE announced it would follow all his recommendations for future external auditing, and for house-cleaning of BAE's band of confidential agents.

But the arms company still faces a potentially dangerous investigation in Washington by the US department of justice. Half BAE's business is now done in the US, which it has identified as the weapons procurement goldmine of the future.

US investigators have been hamstrung by Britain's refusal to cooperate in their investigations, and by difficulties in obtaining access to the Swiss bank accounts, the prospect of disclosure of whose contents has so alarmed the Saudi royal family. But the US department of justice is proving harder to throw off the company's back than the British authorities.